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November 30, 2006

Here’s something that always amuses me about capitalists. Once they get to be successful, they almost always want to be protected from capitalism. That is to say, competition.

And the best example I know is the pharmaceutical companies, who really began to freak out when people started to discuss importing cheaper drugs from Canada.

Now isn’t that supposed to be what capitalism is all about?

Honest competition to try to deliver better products for less money for the consumer? Wasn’t that what you were told in your high school economics class? According to this model, the proper U.S. drug company response should have been to lower prices, and start a crash program to find ways to improve both price and quality.

But did they do that? Of course not. The big pharmaceutical companies ran crying to Washington.

Two years, a Bush Administration task force report appeared that was described as a “Christmas present for the pharmaceutical industry.” It moaned about how costly and complex importing drugs would be. While it did indicate Canadian drugs were perfectly safe, administration spokesmen went around hinting otherwise.

What was most amusing was that the task force moaned that if reimportation of Canadian drugs were legal, the poor drug companies would have billions less to spend on research and development.

That would mean fewer new drugs, and we would all suffer. Here’s a little something the report didn’t mention. The combined profits for the ten Fortune 500 drug companies in one recent year was almost $36 billion dollars.

To put things in perspective, that was more money than all the profits combined of all the other 490 companies on the Fortune list.

On the other hand, the Congressional Budget Office analysis found that if importing drugs from Canada was fully legal, it could save consumers in the United States $40 billion a year.
That would also eliminate any threat of bogus or unsafe drugs coming in through back-alley internet sites.

The ironic twist on all this is that now Canadian pharmacists are getting up in arms over the import issue. With Democrats now solidly in control of Congress, they fear that reimportation will be legalized.

They worry that insurance companies and other big American companies will swoop down, buy vast quantities of Coumadin and Xanax and leave their shelves bare.

My guess is that twin battles will play out in both Ottawa and Washington next year. It wouldn’t surprise me to learn that the big pharmaceuticals are lobbying Canada to get them to prevent sales of their drugs to us lower Americans.

There is a sensible solution to all this, by the way.

The antitrust division of the Justice Department and the Food and Drug Administration could require Big Pharma to sell their products to the American people at a reasonable price. If there were ever an industry that called out for proper regulation, this one is it.

However, I’d advise against holding your breath until that happens. At least not until Jan. 20, 2009.

The high cost of prescription drugs has led to seniors in this country stocking up on medications from Canada, where the price is less. That’s been politically controversial here -- and now it’s an issue in Canada.
A coalition of Canadian pharmacists wants their parliament to ban prescription drug exports to the US. They fear Canadian patients could face widespread drug shortages if the new Congress legalizes such imports.
Michigan Radio’s Jack Lessenberry spoke with Dean Smith about the issue. Smith is a Professor of Health Management and Policy at the University of Michigan.

November 29, 2006

Everyone who has ever read George Orwell’s novel 1984 remembers the slogans “War is Peace,“ “Ignorance is Strength” and “Freedom is Slavery.” Now comes so-called environmental lawyer Edward Warren with his own peculiar contribution to the list.

He was interviewed on the Voice of America yesterday about the first-ever global warming case being argued before the U.S. Supreme Court today. He thinks it is outrageous that anyone would want to use the Clean Air Act to make sure the air is clean.

“The practice for 35 years has been never to consider carbon dioxide emissions to be a pollutant,“ Warren said. Really. Well, what about the scientific evidence showing that carbon dioxide levels have risen to the point where they are contributing to planet-threatening global warming? Ed Warren has an answer for that too.

“Those standards make no sense for a worldwide pollutant issue,” he said. I guess that means that if the factories in Sarnia, Ontario want to pump lead gases into the air flowing over Port Huron, it isn’t our government’s job to do anything about it.

My first thought is that it might be instructive to send old Ed down to the bottom of that mine in West Virginia where a dozen miners died in January. I would be more inclined to listen to him explain from down there why carbon dioxide shouldn’t be regulated. Circumstances might also force him to be succinct.

But then I realized that the best answer was provided a long time ago by Charles Dickens. Actually, by Dickens’ character Mr. Bumble in Oliver Twist. “If the law supposes that,” Bumble says, “the law is a ass—a idiot. The worst I wish the law is that his eye may be opened by experience.” Dickens never heard of global warming, of course, but he did know about Common Sense.

Think about it. Carbon dioxide is endangering the planet. If you haven‘t seen Al Gore‘s movie An Inconvenient Truth, see it now.

Thirty-five years ago, Congress passed The Clean Air Act. Do you think the clean air act was meant to clean up the air?

Do you think the Environmental Protection Agency is supposed to protect the environment? You know the answers. But you might forget them if you had billions depending on getting it wrong.

How the Supreme Court will rule is always uncertain. From what I know about this court, I would guess we are looking at a vote against clean air. But there is always the possibility the justices will remember they have grandchildren.

Incidentally, Michigan’s automakers will say they can’t afford tougher emissions standards, especially now. But I say this is exactly the time. These companies have utterly failed financially.

They are all now scrambling to try and save themselves with turn-around plans. So … as long as the car is in the shop, might as well change the air filter too, eh? Everything else has failed, and doing the right thing just might be worth a try.

The United States Supreme Court takes up its first-ever case on global warming today. A coalition of states, cities and environmental groups want the Environmental Protection Agency to regulate carbon dioxide emissions. The EPA says it doesn’t have the authority to regulate such emissions and would decline to do so if it did.
Michigan Radio’s Jack Lessenberry spoke with Noah Hall about the case. He is a law professor at Wayne State University.

November 28, 2006

Jerry Flint has been covering the auto industry for just about as long as General Motors CEO Rick Wagoner has been alive. He’s worked for the Wall Street Journal and been bureau chief in Detroit for the New York Times. So it is worth paying attention when he says Ford and GM can no longer compete with Honda and Toyota.

But you don’t have to accept his conclusions. You just have to look at the numbers. Ford is projected to lose somewhere between $6 billion and $ 9 billion this year.

General Motors lost more than $10 billion last year and will lose billions more this year. Toyota, on the other hand, expects to show an operating profit of $18.5 billion for this fiscal year.

Honda expects an operating profit of $7 billion.

How in the world can companies hemorrhaging as much money as our domestic automakers compete with companies rolling in so much dough? There is no way they can.

What about taking the radical step of renouncing our agreements and treaties and closing our borders? Even if that were the way to save the domestic auto industry, we couldn’t do it.

For one thing, too many so-called foreign cars are made in the United States, with American labor. Far too many so-called domestic American cars are full of parts from Mexico.

American consumers long ago became cheerfully cynical about all this. Twenty-four years ago, two Detroit autoworkers beat to death a guy named Vincent Chin because they thought he was Japanese.

Today, just about the only place any autoworkers are being hired in this country are in new Japanese plants in states like Tennessee and Alabama. By the way, poor Chin was actually Chinese-American.

However, Vincent Chin’s revenge, if you can call it that, is on its way. Before long small, inexpensive Chinese cars will be landing on our shores and storming up our the freeways.

Everyone has seen this coming for years. Yet what is Detroit’s response? As far as I can tell, the game plan is to crank out a few more Mustangs and put another shrimp on the barbie.

What needs to happen now -- right now -- is for the governor and other leaders of this state to convene a statewide summit meeting on the auto industry and Michigan‘s economic future.

We need not only the Big Three themselves at this summit, but economists. Budget experts. Politicians. Historians. We need to take a look at the big picture of what the auto industry means to our state.

We need to intelligently understand what it means now, what we can expect it to mean for the future, and what we can do.

That’s not to say the state should try and run the economy.

That economy, however, is changing drastically. We need to face this, figure it out and discuss what to do next.

Jerry Flint has covered the automotive industry for major publications for more than half a century. These days he’s of the opinion that “General Motors and Ford can’t compete head to head with Toyota and Honda, not any more.” But he thinks they can still survive. Michigan Radio’s Jack Lessenberry spoke with him.

Posturing, name calling, and not a lot of planning for the future. Now, however, we’ve had another election, and Democrats have captured the State House of Representatives, though not the Senate.

Here’s what the Republican spin on this is. They are saying that this was really a national election. They claim the vote in Michigan was really a vote against the way the war has been going, and also a reaction to corruption in the Republican Congress.

True, some will admit, at least privately, that Dick DeVos turned out to be a dud as a candidate. But they say that the fact that Michigan voters left the state senate in Republican hands is a clear sign that they don’t trust the Democrats and their liberal programs.

And they also point to the election of Andy Dillon as Speaker of the House, a man Bill Ballenger calls “the most moderate to conservative Democrat elected to that post in modern times.”

So were the Democratic victories in Michigan an accident?

Not at all. Instead, the media has been hornswoggled into believing Republican propaganda. This was in fact a moderate to liberal landslide. The truth is that the only reason Republicans control anything at all is due to the “accident” of outrageous gerrymandering.

Let’s look at the record. Democrats got a huge majority -- 54.4 percent -- of all the votes cast for state senate. But Republicans won 21 seats; Democrats only 17. How could this happen?

Simple. Five years ago, a Republican legislature and governor approved a plan to crowd all the Democrats into as few districts as possible, and stretch Republicans over as many as possible. This was subject to approval by a GOP-dominated Supreme Court.

They did the same thing in Congressional districts. Democratic congressional candidates got 300,000 more votes than Republican ones. But that translated into nine Republican winners, and only six Democrats. All the Democrats won by more than two to one.

A large majority of the people of Michigan wanted to be governed by the Democrats, at all levels. To the extent there were competing visions of the future, that’s the one they chose.

But is the new House Speaker a closet conservative? To be sure, he is personally anti-abortion. But when asked what the election meant, he first thing Dillon said was “The voters of Michigan sent a clear message that they want change, and a legislature that puts working families ahead of the wealthy special interests.”

Sixteen years ago, when John Engler took the oath of office as governor, old George Romney gave him two words of advice: “be bold.” This might be the time for Democrats to do the same.

The Democrats have captured control of the Michigan House of Representatives for the first time in ten years. And it has been much longer since they’ve had both the governor’s office and at least one house of the legislature. State Representative Andy Dillon of Redford will be the incoming speaker of the house. Michigan Radio’s Jack Lessenberry spoke with him.

November 22, 2006

I do not know Senate Majority Leader-elect Mike Bishop very well, but I am favorably impressed by something he said about tax policy. Repealing the Single Business Tax left a $1.9 billion annual hole in the state budget, beginning a year from January.

The original plan was to have the outgoing legislature meet in a “lame duck” session to hurriedly try to decide what to do about replacing some or all of that money. Trying to deal with the problem like that never made any sense. Except, of course, politically.

If you have the outgoing lawmakers “fix” the problem, you could blame anything you didn’t like on people who wouldn’t be back.

But that wouldn’t be sound public policy. Nor would just blindly trying to cobble together some tax package so the state can somehow keep paying its bills.
Senator Bishop suggests that we step back and look at the broader questions that should underlie any tax policy.

What do the taxpayers of Michigan need to pay for? What outcomes and results do we want to achieve? Do we agree with Lieutenant Gov. John Cherry that, as the experts say, we need to double the number of people getting college degrees?
What do we want to do about the roads and bridges?
Do we want to fund risk-taking, entrepreneurial activity? As more permanent auto layoffs kick in, do we want to extend the time people are allowed unemployment or welfare benefits?

Now I have no idea what priorities Senator Bishop has. I do know that he is an intelligent and well-educated man.

He has a law degree and is a Realtor, but also studied international law and business for a semester at Cambridge University in England, and at the Sorbonne in France.
That makes me think he should know what Dick DeVos apparently didn’t know. That simply lowering taxes will not be enough to attract the high-tech, highly sophisticated business of the future.
The fact is that the Republican nominee made his position clear, and it was rejected by an overwhelming landslide.

Nobody of quality is going to want to relocate to Michigan, or even stay here very long, if we don’t provide decent schools, roads and other amenities. This is a world built largely by private enterprise. But it is also one where without a public sector, large portions of this nation might still not have electricity.

If our lawmakers step up to the plate next year, and check their ideological blinders at the door, they might accomplish something historic. They could use the repeal of the Single Business Tax as an opportunity to craft a more rational, sensible and strategic system of state financing. We could come up with a better way of paying for our common needs in a way that stimulates future growth.

Or, of course, each party could spent the next four years trying to score cheap points off each other. When it comes to our elected leaders, let’s hope that we are for once pleasantly surprised.

Despite the Democratic tide in this month’s elections, Republicans did hold on to the
state senate. So will that mean gridlock or cooperation as the state faces some crucial
decisions next year? State Senator Mike Bishop of Rochester was just elected majority leader.